NRIs should be prepared to spend some time in India as presence is normally required and helpful for clearing matters of property inheritance.
An individual, whether a Resident or a Non-resident, can devolve his assets to his legal heirs or to any one of his choice via a Will. On demise of an individual when an asset is transferred to his legal heirs or if he has created a Will, then it is called devolution of an asset. The person who receives the said asset is called inheritor and the process is called inheritance.
Inheritance via a Will or Intestate succession:
Challenges that NRIs face:
• May not know whom to contact
• The succession certificate or probate process could be time consuming
• They may have a limited time as they need to return to their residing country
• Lack of knowledge about tax & legal
Challenges of Transferring the title:The process of transferring a title in India can be quite challenging as there could be several processes and aspects that need to be dealt with in Indian courts and various government departments. For NRIs going through this type of process can be a difficult experience as the courts in India are not what they may be used to in foreign countries.
What should the NRIs do:• To seek legal guidance from a local lawyer.
• Seek help of an estate planner
• Seek guidance of a Tax expert
• Collect all the relevant documents, such as a will if available, property documents etc. and have these available when needed
NRI can inherit which assets:
An NRI can inherit movable and immovable assets. There is no much restriction or challenge while inheriting a movable asset. But while inheriting an immovable asset there could be certain conditions that need to be fulfilled. A non-resident Indian (NRI) or person of Indian origin (PIO), can inherit any immovable property in India, whether it is residential or commercial. They can even inherit agricultural land or a farmhouse, which they are otherwise not entitled to acquire by way of purchase. An NRI can inherit the property from anyone including his relatives. The NRI or PIO can inherit property in India even from another NRI or PIO, subject to certain conditions. The RBI’s permission is necessary, if the inheritance results in favour of a citizen of a foreign state, who is a resident outside India.
It is important to note that the person from whom the NRI inherits the property, should have acquired the property being bequeathed, in accordance with the provisions of law relating to foreign exchange, prevalent at the relevant time. So, if the property in question was acquired without obtaining permission from the Reserve Bank of India, when the permission was required to be obtained, such property cannot be inherited by the NRI or PIO, without specific permission of the RBI.
Repatriation of proceeds from the sale of Inherited property:
There are some restrictions on the repatriation of sale proceeds of inherited property. If these rules are followed, then there is no need to obtain permission from the RBI. Permission applies only to those properties that are inherited from persons who are non- residents themselves. Proof of inheritance must be submitted, and the total repatriation amount must not exceed 1 million US dollars in a financial year.It is best to seek an expert advice while drafting a WILL as well as while applying for Probate.